PATRIOT BANK
                              EMPLOYMENT AGREEMENT


     This AGREEMENT is made effective as of December 1, 1998, by and among
Patriot Bank (the "Bank"), a Pennsylvania chartered commercial bank, with its
principal administration office at High and Hanover Streets, Pottstown,
Pennsylvania, and Joni Naugle ("Executive").

     WHEREAS, the Bank wishes to assure itself of the services of Executive for
the period provided in this Agreement;

     WHEREAS, Executive is willing to serve in the employ of the Bank on a
full-time basis for said period.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1.   POSITION AND RESPONSIBILITIES.

     During the period of her employment hereunder, Executive agrees to serve as
Chief Operating Officer of the Bank. Executive shall render administrative and
management services to the Bank such as are customarily performed by persons
situated in a similar executive capacity. During said period, Executive also
agrees to serve, if elected as an officer of the Holding Company or any
subsidiary of the Bank.

2.   TERMS AND DUTIES.

     (a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of thirty-six (36) full calendar months thereafter ("term").
Commencing on the first anniversary date of this Agreement and continuing on
each anniversary thereafter, the disinterested members of the board of directors
of the Bank ("Board") may extend the Agreement for an additional year such that
the remaining term of the Agreement shall be three (3) years unless the
Executive elects not to extend the term of this Agreement by giving written
notice in accordance with Section 8 of this Agreement. The Board will review the
Agreement and Executive's performance annually for purposes of determining
whether to renew the Agreement and the rationale and results thereof shall be
included in the minutes of



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the Board's meeting. The Board shall give notice to the Executive as soon as
possible after such review as to whether the Agreement is to be extended;
however, if Executive has not received a Notice of Termination from the Board,
pursuant to Section 8 hereof, at least thirty (30) days prior to the end of the
annual anniversary date of the Agreement, this Agreement is deemed to be
extended for an additional twenty-four (24) months.

     (b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all her
business time, attention, skill, and efforts to the faithful performance of her
duties hereunder including activities and services related to the organization,
operation and management of the Bank in participation in community and civic
organizations; provided, however, that, during her business time and with
approval of the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which in
such Board's judgment, will not present any conflict of interest with the Bank,
or materially affect the performance of Executive's duties pursuant to this
Agreement.

     (c) Notwithstanding anything herein to the contrary, Executive's employment
with the Bank may be terminated by the Bank or the Executive during the term of
this Agreement, subject to the terms and conditions of this Agreement.

3.   COMPENSATION AND REIMBURSEMENT.

     (a) The Bank shall pay Executive as compensation a salary of One Hundred
Thousand Dollars ($100,000.00) per year ("Base Salary"). Base Salary shall
include any amounts of compensation deferred by Executive under any qualified or
unqualified plan maintained by the Bank. Such Base Salary shall be payable
weekly. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Chief Executive Officer of the Bank. The Chief Executive Officer may increase
Executive's Base Salary. Any increase in Base Salary shall become the "Base
Salary" for purposes of this Agreement. In addition to the Base Salary provided
in this Section 3(a), the Bank shall also provide Executive, at no premium cost

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to Executive, with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank, or provided uniformly to senior
executives and key management employees only.

     (b) The Executive shall be entitled to participate in or receive benefits
under any employee benefit plans including but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, health and
accident plans, medical coverage or any other employee benefit plan or
arrangement made available by the Bank in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
Executive shall be entitled to incentive compensation and bonuses as provided
inany plan of the Bank in which Executive is eligible to participate. Nothing
paid to the Executive under any such plan or arrangement will be deemed to be in
lieu of other compensation to which the Executive is entitled under this
Agreement,nor will it be deemed to be paid in satisfaction of the Base Salary.
                  
     (c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Bank shall pay or reimburse Executive for all reasonable travel and other
reasonable expenses incurred by Executive performing her obligations under this
Agreement and may provide such additional compensation in such form and such
amounts as the Board may from time to time determine.
         
4.   PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Holding Company of Executive's full-time
employment hereunder for any reason other than a termination governed by Section
5(a) hereof, or Termination for Cause, as defined in Section 7 hereof; (ii)
Executive's resignation from the Bank's employ upon any (A) failure to elect or
reelect or to appoint or reappoint Executive as Chief Operating Officer, unless
consented to by the Executive, (B) a material change in Executive's function,
duties or responsibilities, which change would cause Executive's position to


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become one of lesser responsibility, importance or scope from the position and
attributes thereof described in Section 1 above, unless consented to by
Executive, (C) a relocation of Executive's principal place of employment by more
than 20 miles from its location at the effective date of this Agreement, unless
consented to by the Executive, (D) a material reduction in the benefits and
perquisites to the Executive from those being provided as of the effective date
of this Agreement, unless consented to by the Executive, (E) a liquidation or
dissolution of the Bank or Holding Company, or (F) breach of this Agreement by
the Bank, or (iii) the failure or refusal of the Bank and/or Holding Company to
extend this Agreement pursuant to Section 2(a) above. Upon the occurrence of any
event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive
shall have the right to elect to terminate her employment under this Agreement
by resignation upon not less than sixty (60) days prior written notice given
within six (6) full months after the event giving rise to said right to elect.
                  
     (b) Upon a Event of Termination, Executive shall be entitled to the
benefits provided in Section 5(c) and (d) below, and such benefits shall not be
reduced in the event that Executive obtains other employment following
termination of her employment hereunder.

 5.  CHANGE IN CONTROL.

     (a) No benefit shall be payable under this Section 5 unless there shall
have been Change in Control of the Bank or Patriot Bank Corp. (the "Holding
Company"). For purposes of this Agreement, a "Change in Control" of the Bank or
Holding Company shall mean an event of a nature that: (i) would be required to
be reported in response to Item 1 of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. ss.303.4(a) with
respect to the Bank and the Board of Governors of the Federal Reserve System
("FRB") at 12 C.F.R. ss.225.41(b) with respect to the Holding Company, as in
effect on the date hereof; or (iii) results in a transaction requiring prior FRB
approval under the Bank Holding Company Act of 1956 and the regulations
promulgated thereunder by the FRB at 12 C.F.R. ss.225.11, as in effect on the
date hereof except for the Holding Company's acquisition of the Bank; or (iv)

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without limitation such a Change in Control shall be deemed to have occurred at
such time as (A) any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of voting securities of
the Bank or the Holding Company representing 20% or more of the Bank's or the
Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Bank purchased by the Holding
Company and any voting securities purchased by any employee benefit plan of the
Bank or the Holding Company, or (B) individuals who constitute the Board on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Holding Company's stockholders was approved by the same
Nominating Committee serving under an Incumbent Board, shall be, for purposes of
this clause (B), considered as though she were a member of the Incumbent Board,
(C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Holding Company or similar
transaction occurs in which the Bank or Holding Company is not the resulting
entity; provided, however, that such an event listed above will be deemed to
have occurred or to have been effectuated upon the receipt of all required
regulatory approvals not including the lapse of any statutory waiting periods,
(D) a proxy statement shall be distributed soliciting proxies from shareholders
of the Holding Company, by someone other than the current management of the
Holding Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Holding Company or Bank or similar transaction
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Holding Company, or (E) a tender offer is made for 20% or more of the voting
securities of the Bank or the Holding Company.

     (b) If a Change in Control has occurred pursuant to Section 5(a) or the
Board has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c) and (d) of this Section 5
upon her subsequent termination of employment at any time during the term of
this Agreement due to: (1) Executive's dismissal or (2) Executive's voluntary

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resignation following any occurrence, under the control of the Bank's or Holding
Company's successor in control, set forth in Section 4(a)(ii)(A) through (F) or
(iii), unless such termination is because of Executive's Termination for Cause.

     (c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Bank shall pay Executive, or in the event of her subsequent death, her
beneficiary or beneficiaries, or her estate, as the case may be, a sum equal to
the greater of: (1) the payments due for the remaining term of the Agreement; or
(2) three (3) times Executive's average annual compensation for the five (5)
most recent taxable years that Executive has been employed by the Bank or such
lesser number of years in the event that Executive shall have been employed by
the Bank for less than five (5) years. Such average annual compensation shall
include Base Salary, commissions, bonuses, contributions on Executive's behalf
to any pension and/or profit sharing plan, severance payments, retirement
payments, directors or committee fees, fringe benefits paid or to be paid to the
Executive in any such year and payment of any expense items without
accountability or business purposes or that do not meet the Internal Revenue
Service requirements for deductibility by the Bank. At the election of the
Executive, which election is to be made within thirty (30) days of the Date of
Termination, such payments shall be made in a lump sum or paid in equal monthly
installments during the thirty-six (36) months following the Date of
Termination. In the event that no election is made, payment to the Executive
will be made in approximately equal installments on a monthly basis over a
period of thirty-six (36) months following the Executive's termination. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.

     (d) Upon the executive's entitlement to benefits pursuant to Section 5(b),
the Bank will cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the Bank for
Executive prior to her severance at no premium cost to the Executive, except to
the extent that such coverage may be changed in its application for all Bank
employees on a non-discriminatory basis. Such coverage and payments shall cease
upon the expiration of thirty-six (36) months following the Date of Termination.


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6.   CHANGE OF CONTROL RELATED PROVISIONS.

     Notwithstanding the provisions of Section 5, in no event shall the
aggregate payments or benefits to be made or afforded to Executive under said
paragraphs (the "Termination Benefits") constitute an "excess parachute payment"
under Section 280G of the Code or any successor thereto, and in order to avoid
such a result, Termination Benefits will be reduced, if necessary, to an amount
(the "Non-Triggering Amount"), the value of which is One Dollar ($1.00) less
than an amount equal to three (3) times Executive's "base amount," as determined
in accordance with said Section 280G. The allocation of the reduction required
hereby among the Termination Benefits provided by Section 5 shall be determined
by Executive.

7.   TERMINATION FOR CAUSE.

     (a) The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or material
breach of any provision of this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a Notice of Termination which shall
include a copy of the resolution duly adopted by the affirmative vote of not
less than a majority of the members of the Board at a meeting of the Board
called and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good-faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Except as provided in Section 7(b) hereof, Executive shall not have
the right to receive compensation or other benefits for any period after the
Date of Termination. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 8 hereof through the Date of
Termination, any stock options and related limited rights granted to Executive
under any stock option plan shall not be exercisable nor shall any unvested
awards granted to Executive under any stock benefit plan of the Bank, the
Holding Company or any subsidiary or affiliate thereof, vest. At the Date of
Termination, such stock options and related limited rights and any such unvested

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awards shall become null and void and shall not be exercisable by or delivered
to Executive at any time subsequent to such Termination for Cause.

     (b) If, within thirty (30) days after Notice of Termination for Cause is
received by Executive, the Executive notifies the Bank that a dispute exists
concerning the termination ("Notice of Dispute"), the Date of Termination shall
be date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expire and no appeal having been perfected) and provided
further that the Date of Termination shall be extended by a Notice of Dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence. In the event
the Executive pursues resolution of such dispute through arbitration in
accordance with the rules of the American Arbitration Association then in
effect, the Bank will continue to pay Executive her Base Salary in effect when
the Notice of Dispute notice giving rise to the dispute was given until the
earlier of: (1) the resolution of the dispute pursuant to arbitration in
accordance with this Agreement, or (2) six (6) months from the Date of
Termination as specified in the Notice of Termination for Cause.

8.   NOTICE.

     (a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.

     (b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
                  
     (c) If, within the thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written

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agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, which shall be governed
by Section 7 of this Agreement, the Bank will continue to pay Executive her Base
Salary in effect when the notice giving rise to the dispute was given until the
earlier of: (1) the resolution of the dispute in accordance with this Agreement
or (2) the expiration of the remaining term of this Agreement as determined as
of the Date of Termination. Amounts paid under this Section are in addition to
all other amounts due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.

9.   POST-TERMINATION OBLIGATIONS.

     All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Bank. Executive shall, upon reasonable notice,
furnish such information and assistance to the Bank as may reasonably be
required by the Bank in connection with any litigation in which it or any of its
subsidiaries or affiliates is, or may become, a party.

10.  NONDISCLOSURE OF BANK BUSINESS.

     Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Bank and affiliates thereof,
as it may exist from time to time, is a valuable, special and unique asset of
the business of the Bank. Executive will not, during or after the term of her
employment, disclose any knowledge of the past, present, planned or considered
business activities of the Bank or affiliates thereof to any person, firm,
corporation, or other entity for any reason or purpose whatsoever.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principals, concepts or ideas which are not solely and
exclusively derived from the business plans and activities of the Bank. Further,

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Executive may disclose information regarding the business activities of the Bank
to the Federal Deposit Insurance Corporation ("FDIC") pursuant to a formal
regulatory request. In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for
such breach or threatened breach, including the recovery of damages from
Executive.

11.  SOURCE OF PAYMENTS.

     All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.

12.  EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits that
those available to him without reference to this Agreement.

13.  NO ATTACHMENT.

     (a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.

     (b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Bank and their respective successors and assigns.


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14.  MODIFICATION AND WAIVER.

     (a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.

     (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver 
of such term or condition for the future as to any act other than that 
specifically waived.

15.  LIMITATION ON PAYMENTS.

     Any payments made to Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon compliance with 12 U.S.C. ss.1828(k) and 12
C.F.R. Pt. 359 and any rules and regulations promulgated thereunder.

16.  SEVERABILITY.

     If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

17.  HEADINGS FOR REFERENCE ONLY.

     The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

18.  GOVERNING LAW.

     The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Pennsylvania, but only to the
extent not superseded by federal law.


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 19. ARBITRATION.

     Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of her right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

     In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive shall be entitled to the payment of all
back-pay, including salary, bonuses and any other cash compensation, fringe
benefits and any compensation and benefits due Executive under this Agreement.

20.  PAYMENT OF COSTS AND LEGAL FEES.

     All reasonable costs and legal fees paid or incurred by Executive pursuant
to any dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Bank if Executive is successful on the merits pursuant
to a legal judgment, arbitration or settlement.

21.  INDEMNIFICATION.

         The Bank shall provide Executive (including her heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its
expense, or in lieu thereof, shall indemnify Executive (and her heirs, executors
and administrators) to the fullest extent permitted under Pennsylvania law
against all expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which she may be
involved by reason of her having been a director or officer of the Bank (whether
or not she continues to be a director or officer at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not be
limited to, judgements, court costs and attorneys' fees and the cost of
reasonable settlements.


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22.  SUCCESSOR TO THE BANK.

     The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.

                                   SIGNATURES

     IN WITNESS WHEREOF, Patriot Bank has caused this Agreement to be executed
and its seal to be affixed hereunto by its duly authorized officers and
directors, and Executive has signed this Agreement on the _____ day of
________________, 1998.

ATTEST:                                         PATRIOT BANK

_________________________           By________________________________
       Secretary                         Joseph W. Major for the Entire
                                         Board of Directors

[SEAL]

WITNESS:

-------------------------           ----------------------------------
                                                     Joni Naugle


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